Hong Kong, NYC Close Q3 as Priciest Retail Markets
- Dec 19, 2012
Hong Kong and New York City kicked off 2012 at the top of the list of the world’s most expensive retail markets and, barring any major developments, it appears the globally-coveted shopping metropolises are going to end the year without a threat to their respective first- and second-place positions, judging by CBRE Group Inc.’s third-quarter MarketView research report.
Despite the still precarious global economy, somebody out there–international tourists with expensive tastes, to be precise–has the funds to spend on luxury goods and it’s that consumer population that continues to push the retail rents up sky-high in gateway cities around the world. Hong Kong and New York City are both experiencing strong international tourism numbers.
With limited availability of new premier space amid continued demand, the price tag on retail square-footage in Hong Kong reached the U.S. equivalent of $4,334 per square-foot in the third quarter, placing the city firmly in the number-one spot. New York City, also contending with constrained supply, rents reached an average $2,925 per-square-foot, helped along in no small part by the 17 percent quarter-over-quarter jump in the price for space on Manhattan’s Fifth Avenue. As noted in the report, for a retailer to “legitimately claim a global identity,” it has to count Manhattan as one of its addresses.
What a difference a year makes. In the third quarter of 2011, New York City was in first place with an average rent of $1,900 per square-foot, and Hong Kong was second at $1,695 per square-foot.
In 2012 the names have remained the same on the list of the top five most expensive retail markets in the world. Tokyo ranked third in the third quarter, with international fast-fashion and food and beverage retailers playing a role in raising rent to $1,084 per square-foot. Sydney, the target market for international retailers planning an entrée into Australia, was fourth at $1,017 per square-foot, followed by fifth-place London, where the average $988 per square-foot rents were attributed to luxury and international high fashion retailers’ ongoing demand for accommodations.
Melbourne, Zurich, Paris, Moscow and Brisbane rounded out the top 10 list in the third quarter. Rental rates ranged from an average $850 per square-foot in Melbourne down to $642 per square-foot in Brisbane.
All told, the third quarter brought good news. The CBRE Global Retail Rent Index increased by 2 percent quarter over quarter, and by a notable 7.3 percent year over year. And more of the same appears to be in store for 2013.
“For the top retail locations on the world’s best retail corridors the outlook remains positive, driven by limited new space and an insatiable appetite for prime space among competing retailers,” Ray Torto, global chief economist with CBRE, told Commercial Property Executive. “Retailers see such prime space as a competitive locational advantage vis-à-vis their competition.”
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